The independent body set up to scrutinise new Government regulations needs sharper teeth to defend small businesses against poorly framed regulations, the Federation of Small Businesses (FSB) has warned.

Marking the first anniversary of the Government's moratorium from new domestic regulation for micro businesses, the FSB has published a report which argues that the Regulatory Policy Committee (RPC) needs more powers to scrutinise performance, advocate regulatory reform and act as an ombudsman.

The report, entitled 'Regulatory reform: where next?', also calls on the Government to look at models from the USA, Australia and the Netherlands to see what structural changes could be put in place to improve to UK's regulatory system.

John Walker, National Chairman, Federation of Small Businesses, said:

"Poorly designed, ill-thought out regulation isn't just an irritation for small businesses, it costs in time, money and may not even achieve what it set out to. It's good that the Regulatory Policy Committee is there to clamp down on this sort of bad regulation, and we welcome the Government's progress so far on this issue, but the RPC needs real powers if it is to drive change and challenge Whitehall culture. It needs to be able to scrutinise performance in a transparent way and be a powerful advocate for Government-wide change."

While the FSB welcomes the Government's regulatory reform programme so far, FSB figures show that in the last year four in 10 small firms saw the cost of complying with regulation increase and six in 10 said the cost of complying with regulation costs more than £1,000 a year. And despite numerous initiatives, only one in three impact assessments for new regulations show the regulations are fully fit for purpose. Further, the UK ranks 83 out of 142 for the compliance burden it places on businesses.

The FSB believes that this performance could be improved if the RPC was able, for example, to ensure that issues it identifies in impact assessments were thoroughly addressed by the relevant Government department, and it was able to publish its opinions on all impact assessments.

The RPC should be given powers to:

• Scrutinise: by allowing it to publish its opinions and produce annual reports on department's performance on all regulatory reform measures

• Advocate: suggest, advise and explore alternatives to regulation, special measures or exemptions for micro businesses and other measures that will help improve regulation for small businesses

• Act as an ombudsman: be a single point of contact for small businesses if problems arise